This paper uses a two-sector open economy model to examine the dynamic absorption of foreign aid in the presence of both formal and informal production. Calibrating the model to yield a long-run equilibrium consistent with sample averages for 72 aid-recipient developing countries for the period...

In this paper, we examine the relationship between infrastructure investment and economic welfare in the context of a heterogeneous agent, incomplete-markets economy. Using a quantitative model to match the key aggregate and distributional features of the U.S. economy over the period 1990-2015,...